March 2019
Beginner
720 pages
24h 22m
English
Content preview from Portfolio Management
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
CHAPTER 12Portfolio Management Through Time: Taxes and Transaction Costs
Chapter Outline
- 12.1 Introduction
- 12.2 Performance Shortfall
- 12.3 Portfolio Adjustments Without Taxes or Costs
- 12.4 Transaction Costs
- 12.5 Taxation of Investment Returns in the United States
- 12.6 Strategies to Reduce Individual Investor Taxes
- 12.7 Tax Managing a Portfolio of Securities
12.1 INTRODUCTION
Portfolio management is an inherently dynamic process. In Chapter 5 we saw that changing investment opportunities induce dynamic adjustments in our desired, or target, portfolio. For investors with finite lives, the mere passage of time will induce portfolio adjustments due to shortening investment horizons. At an even more basic level, market movements require us to rebalance portfolios to avoid drifting away from our desired positions.
This chapter focuses on two sources of friction—transaction costs and taxes—that affect our ability to keep an actual portfolio aligned with our ideal, target portfolio over time. These factors have both direct and indirect effects on performance. The direct impact is, of course, the drain on assets when the costs are incurred. One indirect impact arises because frictions inhibit fully capturing the potential value added of the ideal portfolio. Another indirect impact is especially important in the case of taxes. Because taxes alter the relative risk–return characteristics of available assets, tax avoidance may induce managers to select portfolios ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.